Part time specialist car trader advise
Discussion
Good afternoon all
im sure this has been done to death on here but any advise would be greatly appreciated,
in the next few years im looking to become a specialist car trader focusing on modern classics, M3, 911 ect ect
I would like to start from home as a part time trader and then hopefully make it full time in years to come
Im aware of all the licences and insurances I have to obtain and also know I need to check im ok to run this from a home address, I will look to set it up
as a ltd company and im going to focus on cars I know and do my home work before making any purchases as I only want to move on good decent cars
that I would want to buy.
I would like to start with 3-4 cars and then who knows in the future.
could anyone out there give me any advise on the pitfalls against my plan and any issues you have come across along the way.
many thanks
im sure this has been done to death on here but any advise would be greatly appreciated,
in the next few years im looking to become a specialist car trader focusing on modern classics, M3, 911 ect ect
I would like to start from home as a part time trader and then hopefully make it full time in years to come
Im aware of all the licences and insurances I have to obtain and also know I need to check im ok to run this from a home address, I will look to set it up
as a ltd company and im going to focus on cars I know and do my home work before making any purchases as I only want to move on good decent cars
that I would want to buy.
I would like to start with 3-4 cars and then who knows in the future.
could anyone out there give me any advise on the pitfalls against my plan and any issues you have come across along the way.
many thanks
I set myself up as a sole trader (selling cars) earlier this year.
On the advice of a good friend's mum (who co-owns a firm of accountants) I did not set up as a limited company.
It's just unnecessarily complicated for a part time trader.
It's fine to run a car sales business from a home address but there are some things to keep in mind (that I've read online so are not necessarily 100% correct).
You are not allowed to have advertising signs in the cars or on the property.
You are not allowed to carry out work on the cars on that property, and that includes washing the cars! It's because any chemicals used or old oil etc. becomes industrial waste (although I doubt this rule is heavily policed).
Read any insurance policies thoroughly so you fully understand what you / anyone else is allowed to drive and when, a trade policy won't necessarily give you free rein to drive what you like whenever you like.
Trade plates don't cover you for having no M.O.T.
Get an accountant.
Close your eyes on test drives!
I'm quite enjoying my little sideline although, not surprisingly, it's gone a bit quiet at the moment.
Good luck!
On the advice of a good friend's mum (who co-owns a firm of accountants) I did not set up as a limited company.
It's just unnecessarily complicated for a part time trader.
It's fine to run a car sales business from a home address but there are some things to keep in mind (that I've read online so are not necessarily 100% correct).
You are not allowed to have advertising signs in the cars or on the property.
You are not allowed to carry out work on the cars on that property, and that includes washing the cars! It's because any chemicals used or old oil etc. becomes industrial waste (although I doubt this rule is heavily policed).
Read any insurance policies thoroughly so you fully understand what you / anyone else is allowed to drive and when, a trade policy won't necessarily give you free rein to drive what you like whenever you like.
Trade plates don't cover you for having no M.O.T.
Get an accountant.
Close your eyes on test drives!
I'm quite enjoying my little sideline although, not surprisingly, it's gone a bit quiet at the moment.
Good luck!
What is your buiness plan, what are expected margins, what is the warranty fund incase stuff goes wrong, and will you offer additional warrantees.
Will you be buying from auctions or adverts, who will check the cars over mechanically before buying stock?. How will you take payments? What will be your niche as I think expecting to buy a car add margin and resell has been done a lot by part time traders, so not as easy to do.
These would all be my questions.
Will you be buying from auctions or adverts, who will check the cars over mechanically before buying stock?. How will you take payments? What will be your niche as I think expecting to buy a car add margin and resell has been done a lot by part time traders, so not as easy to do.
These would all be my questions.
The Spruce goose said:
What is your buiness plan, what are expected margins, what is the warranty fund incase stuff goes wrong, and will you offer additional warrantees.
Will you be buying from auctions or adverts, who will check the cars over mechanically before buying stock?. How will you take payments? What will be your niche as I think expecting to buy a car add margin and resell has been done a lot by part time traders, so not as easy to do.
These would all be my questions.
^+Will you be buying from auctions or adverts, who will check the cars over mechanically before buying stock?. How will you take payments? What will be your niche as I think expecting to buy a car add margin and resell has been done a lot by part time traders, so not as easy to do.
These would all be my questions.
FCA authorisation or appointed company, finance facilities, local council registration scheme (varies by area), trade in appraisal and disposal if outwith your stock profile, funding your stock, cash flow (particularly if you get an expensive bork or rejection), marketing, proportionality of reviews on web platforms (small trader only needs 1 bad review to have a terrible profile, large dealers can dilute a bad review through volume), security esp with high end metal... Not easy.
Agreed, if its a nice motor I would feel safer buying it from proper premises off a clear dealer with a nice website and finance options, things that say you're invested and cant close the doors tomorrow.
Perhaps start with a few older but good examples for not much money and start getting a reputation, and work your way up, easier to sell older / cheaper models and when you start getting a reputation and making money its easier to expand.
Perhaps start with a few older but good examples for not much money and start getting a reputation, and work your way up, easier to sell older / cheaper models and when you start getting a reputation and making money its easier to expand.
I do this and have done for some time for an independent specialist (Porsche) and have considered going my own way in the past but seeing it from the inside there is a lot of risk. Not just the cars you buy, but the preparation, the warranty, the calls and all of this I am fully aware of yet i'm still not brave enough to make the move. I deal with predominantly Porsche and there is so much to be aware of when buying them. I source the cars, do all the leg work and then the owner (Of the business) goes and collects/pays for them and makes sure they match the descriptions given, the cars then come back to the site (Which we now own) and are put through an independent inspection (customers expect this as a minimum now) before then having remedial work carried out and paintwork done.
I'd love to start-up but there can be some big bills out there quite easily.
Knowledge is key, especially when it comes to the cars (obviously) and having a nice place for people to come and view the cars be it a meeting place or a showroom.
Good luck, customer base is a good start, treat them well and they will return! I treat people how I expect to be treated and it's worked well for me.
I'd love to start-up but there can be some big bills out there quite easily.
Knowledge is key, especially when it comes to the cars (obviously) and having a nice place for people to come and view the cars be it a meeting place or a showroom.
Good luck, customer base is a good start, treat them well and they will return! I treat people how I expect to be treated and it's worked well for me.
Edited by ChrisDT on Wednesday 20th December 18:01
md4776 said:
This is very likely just me but while I'm fine buying a car off a legit driveway trader for 4/5 grand etc , and have done in the past, if i was parting with 30 or 40 for an M3 or 911 i wouldn't be.
I dont really know why, just wouldn't. Equally wouldnt buy a car privately at that sort of money either.
+1.I dont really know why, just wouldn't. Equally wouldnt buy a car privately at that sort of money either.
OP, research your customers and make sure there are enough to support your business and aspirations. I wouldn't buy a specialist car from anyone trading from their own driveway, unless it was a private sale at a bargain price or that person was well known in the community (so coming with lots of positive recommendations and expertise that gives me confidence in you/your business).
For me a trader conducting business from his own house just feels corner cutting / cheap / potentially dodgy. It doesn't give me much confidence as a buyer that I want to give you my money. I've had too many occasions of going to view cars being sold this way and being put off because the dealer appears to be after a fast buck, has no knowledge of what he's selling, the cars are poorly prepared, they cars are parked all over the surrounding streets because the trader doesn't have a large enough space to store them, etc, etc...
Also, what about Financing options?
You will need to register for vat as well (assumption based on you easily turning over > vat threshold if you are selling prestige cars 3-4 at a time)
With the used car margin scheme this will cost you 17% of the profit you make on each vehicle in vat alone, then you will also have a corporation tax bill if you manage to make any profit.
With the used car margin scheme this will cost you 17% of the profit you make on each vehicle in vat alone, then you will also have a corporation tax bill if you manage to make any profit.
shelf1985 said:
You will need to register for vat as well (assumption based on you easily turning over > vat threshold if you are selling prestige cars 3-4 at a time)
With the used car margin scheme this will cost you 17% of the profit you make on each vehicle in vat alone, then you will also have a corporation tax bill if you manage to make any profit.
This is not just the profit after costs either, this is the difference between the buying price and the selling price - The government don't care how much you spent on it. so buy at £35000, sell at £42000 and spend £5k on it your taxed on the 7k in the middle - so £1400 @ 20% making you £600 profit on a 35k car not taking into account marketing and warranty costs. With the used car margin scheme this will cost you 17% of the profit you make on each vehicle in vat alone, then you will also have a corporation tax bill if you manage to make any profit.
Dont get me started on this, Ive just posted a topic up on the business part of PH forum as Im a part time trader who went self-employed 9 months ago and struggling to see the time and effort is worthwhile aswell as now nearly at the VAT threshold which seriously impacts a part-time traders profit margin!
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